Published April 12, 2013
FOX Business: Capitalism Lives Here
U.S. stock-index futures pointed lower Friday as traders mulled tepid quarterly earnings from two of the biggest American banks and awaited a slew of key economic reports.
As of 8:50 a.m. ET, Dow Jones Industrial Average futures fell 43 points to 14753, S&P 500 futures dropped 5.8 points to 1582 and Nasdaq 100 futures slumped 11.5 points to 2842.
The Dow and S&P 500 closed out the day record highs on Thursday -- the fourteenth time this year for the blue-chip average. However, sentiment was mildly gloomier on Friday.
J.P. Morgan Chase (JPM) and Wells Fargo (WFC) kicked off bank earnings season with profits that beat expectations, but shares of both banking giants dropped in early trade. Chase, the biggest U.S. bank by assets, unveiled first-quarter profits of $1.41 a share, excluding certain items, compared to estimates of $1.39. Revenues of $25.8 billion essentially matched forecasts.
Wells Fargo posted first-quarter profits of 92 cents a share, topping estimates of 88 cents. Revenues of $21.3 billion came in shy of expectations of $21.6 billion. Shares dropped more than 1% in pre-market trading.
Michael Block, chief equities strategist at Phoenix Partners Group, said that traders were concerned about several technical factors. For one, he said, the release of loan-loss reserves have helped pad profits and help increase the size of the beats on the bottom lines. Also, net interest margins, which are a measure of the interest rates banks receive for loans compared to what they need to pay to depositors, have caused worries, he said.
The Commerce Department said U.S. retail sales dropped 0.4% in March, compared to expectations that they would hold steady. Excluding the auto segment, sales were down 0.4% for the month, also falling short of forecasts of no change.
A report from the Labor Department showed prices at the producer level dropped 0.6% in March from February, the biggest drop since last May, and steeper than the 0.2% decrease economists expected. The sharp drop was led by a 3.4% plunge in energy prices. Excluding the food and energy components, prices rose 0.2%, matching forecasts.
At 9:55 a.m. ET, traders will get a look at consumer sentiment for early April. The Reuters/University of Michigan gauge is forecast to have edged just slightly lower to 78.5 from 78.6 last month.
Later in the morning the Commerce Department provides data on business inventories, which are seen as an indicator of expected demand. The measure is expected to have risen 0.4% in February from January.
In commodities, the benchmark U.S. crude oil contract sold off by $1.37, or 1.5%, to $92.12 a barrel. Wholesale New York Harbor gasoline dipped 0.88% to $2.81 a gallon. In metals, gold tumbled $21.90, or 1.4%, to $1,543 a troy ounce.
The Euro Stoxx 50 sold off by 1.2% to 2642, the English FTSE 100 dipped 0.38% to 6391 and the German DAX plummeted 1.4% to 7765.
In Asia, the Japanese Nikkei 225 edged lower by 0.47% to 13485 and the Chinese Hang Seng ticked lower by 0.06% to 22089.